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08. January 2008

No-nonsense BHP boss Kloppers still has Rio Tinto firmly in his sights

With British regulators insisting BHP puts up or shuts up by Feb 6th on its proposal to buy Rio Tinto there are no signs that new BHP chief executive Marius Kloppers is walking away from the bid concept.

If BHP Billiton's new chief executive Marius Kloppers walks away from his bold proposal to buy rival mining titan Rio Tinto, and that's a big if, it won't be for lack of trying.

Little more than two months after rising to the top job at BHP , the sideburned 45-year-old South African, has made it clear he wants to make the world's biggest miner even bigger in time to catch the boom in world commodities markets.

"We believe in a world where more than two billion people are entering the industrial age," he told analysts in unveiling the bid in November. "The demand outlook continues to be strong."

Rio has rejected Kloppers' informal $139 billion all-share offer, saying it is happy to ride the boom on its own. But there is plenty of speculation of a counter-bid, possibly from China.

Kloppers was not available for an interview, according to BHP spokeswoman Samantha Evans.

A BHP-Rio Tinto deal had long been rumoured, but it took Kloppers to muster the nerve to push ahead.

His team has given the Rio plan a code name, "De Bello", in reference to Caesar's hard-fought victory over Gallic leader Vercingetorix in 52 BC. Like Caesar, who eventually had Vercingetorix strangled, Kloppers is willing to bide his time.

Nevertheless, British regulators have set Melbourne-based BHP a Feb. 6 deadline to make a formal bid or walk away from what would be the second-biggest corporate takeover in history after Vodafone's $203 billion purchase of Mannesman in 2000.

That means Kloppers' next move is imminent: analysts polled by Reuters recently expected BHP to raise its offer by a fifth.

FAST MOVER

Mega-mergers are not new to Kloppers, a management consultant who joined Billiton in 1993. In addition to mentioning a love of Bob Dylan songs, his biography also says he took a key role in BHP's 2001 merger with Billiton, once part of Royal Dutch Shell.

By the time BHP bought Australian nickel miner WMC in 2005 for $6 billion, Kloppers was part of the corporate hierarchy.

"Marius moves at a fast clip, which can be challenging at times for others in the organisation trying to keep pace," said a South African mining analyst who watched him climb BHP's ladder.

"But his organisational skills are superb and he knows what he wants out of people," said the analyst, speaking on condition of anonymity because his firm does not permit him to talk to media.

The idea of a super miner with massive market clout has unnerved steel makers from Germany to China, who buy millions of tonnes of iron ore from both BHP and Rio, and has raised the eyebrows of competition regulators in dozens of countries.

Rio has branded the idea "out of the ballpark" and "dead in the water".

But Kloppers insists the deal is a win-win for both firms. "The bottom line is that these two companies are worth more put together than they are worth apart," he said at BHP's annual shareholders meeting in Adelaide.

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